1. Management Information Systems MANAGING THE DIGITAL FIRM, 12 TH EDITION INFORMATION SYSTEMS IN BUSINESS TODAY Chapter 1

2. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Understanding the effects of information systems on business and their relationship to globalization. Explain why information systems are so essential in business today. Define an information system and describe its management, organization, and technology components. Learning Objectives © Prentice Hall 20112

3. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Define complementary assets and explain how they ensure that information systems provide genuine value to an organization. Learning Objectives (cont.) © Prentice Hall 20113

4. Where is the emphasis? Where should it be? Information Technology The stress should be on the ‘I’ rather than the ‘T’ in ‘IT’ (Davenport, 2000). Peter Drucker stressed the importance of information to organisational competitiveness in 1993 when he wrote: ‘The industries that have moved into the center of the economy in the last forty years, have as their business, the production and distribution of knowledge and information rather than the production and distribution of things’.

5. What is data? Data are raw facts or observations that are considered to have little or no value until they have been processed and transformed into information. Example definitions: (a) a series of non-random symbols, numbers, values or words; (b)a series of facts obtained by observation or research and recorded; (c)a collection of non-random facts; (d)the record of an event or fact.

6. What is information ? Information: Data that have been processed so that they are meaningful. Example definitions: (a)data that have been processed so that they are meaningful; (b)data that have been processed for a purpose; (c)data that have been interpreted and understood by the recipient.

7. Transforming data into information using a data process

8. Information – summary Information: Involves transforming data using a defined process; involves placing data in some form of meaningful context; Is produced in response to an information need and therefore serves a specific purpose; Helps reduce uncertainty, thereby improving decision behavior.

9. Types of information processing Classification: This involves placing data into categories, for example, categorizing an expense as either a fixed or a variable cost. Rearranging/sorting: This involves organizing data so that items are grouped together or placed into a particular order. Employee data, for example, might be sorted according to last name or payroll number. Aggregating: This involves summarizing data, for example, by calculating averages, totals or subtotals. Performing calculations: An example might be calculating an employee’s gross pay by multiplying the number of hours worked by the hourly rate of pay. Selection: This involves choosing or discarding items of data on the basis of a set of selection criteria. A sales organization, for example, might create a list of potential customers by selecting those with incomes above a certain level.

10. Activity 1.1 – data versus information Which of the following might be examples of information? Which might be examples of data? – (a)the date – (b)a bank statement – (c)the number 1355.76 – (d)a National Insurance number – (e)a balance sheet – (f)a bus timetable – (g)a car registration plate – (h) your grade in a course – (i) employees who were late this month (list) – (j) number of sold items of certain products by region

11. Development and use of information systems that help businesses achieve their goals and objectives. Computer-based information system What is MIS?

12.  Hardware—desktops, laptops, PDAs  Software—operating systems, application programs  Data—facts and figures entered into computers  Procedures—how the other four components are used  People—users, technologists, IS support What is MIS? Five Components of an Information System Information system—an assembly of hardware, software, data, procedures, and people that interact to produce information.

13. Development Information systems are built for business professionals (you) to use. You need to take an active role in specifying system requirements and in managing development projects to ensure that the system meets your needs and the organization’s needs. Use You need to learn how to use to accomplish your goals. You have responsibilities for protecting security of system and data. You have responsibilities for backing up data. You will help in recover systems and data. Development and Use of Information Systems

14. Businesses themselves do not “do” anything. People within a business sell, buy, design, produce, finance, market, account, and manage. Information systems exist to help people in business achieve the goals and objectives of that business. == IS goal is to leverage human being capabilities. Achieving Business Goals and Objectives Video of salesforce.com

15. Five components interact with each other to create a complete system.  Actors—hardware and people take actions  Instructions—software and procedures provide instructions for actors  Bridges—data bridges hardware/software and people/procedures How Can You Use the Five-Component Framework?

17. Low-tech IS  Consists only of a file of email addresses and an email program.  Only small amount of work moved from the human side to computer side.  Considerable human work is required to determine when to send which emails to which customers. High-Tech vs. Low-Tech Information Systems

18. High-tech IS  Customer support system keeps track of equipment customers have, maintenance schedules for equipment, and automatically generates email reminders to customers.  More work has been moved from human side to computer side.  Computer is providing more services on behalf of humans. High-Tech vs. Low-Tech Information Systems

19. Low-tech—using an email program and its addresses is low- tech because just a small amount of work is being accomplished by a computer system. High-tech—implementing a customer support system is high- tech because a large amount of work is being accomplished by the computer system rather than humans. Determining factor is amount of work that is moved from human side to computer side. High-Tech vs. Low-Tech Information Systems

20. Ask questions What new hardware will you need? What programs will you need to license? What databases and other data must you create? What procedures will need to be developed for both use and administration of the information system? What will be the impact of the new technology on people?  Which jobs will change?  Who will need training?  How will the new technology affect morale?  Will you need to hire new people?  Will you need to reorganize? Understanding the Scope of New Information Systems

21. Five IS components evaluated based on order of ease of change and amount of organizational disruption. 1.Hardware is simple to order and install. 2.Obtaining or developing new programs is more difficult. 3.Creating new databases or changing structure of existing databases is more difficult. 4.Changing procedures, requiring people to work in new ways, is even more difficult. 5.Changing personnel responsibilities and reporting relationships and hiring and terminating employees are both very difficult and very disruptive. Components Ordered by Difficulty and Disruption

22. Information technology (IT) pertains to things you buy:  Hardware  Software  Data components Things you can buy or lease:  Products  Methods  Inventions  Standards (obtain predesigned procedures) Information technology drives the development of new information systems. Difference Between Information Technology and Information Systems?

23. Information Systems (IS) include five components:  Hardware  Software  Data  Procedures  People New systems—always have training tasks (and costs), employees resistance to change to overcome, and need to manage employees as they utilize the new system. You can buy IT, you cannot buy IS. Difference Between Information Technology and Information Systems?

24. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY How information systems are transforming business – Increase in wireless technology use, Web sites – Increased business use of Web 2.0 technologies – Cloud computing, mobile digital platform allow more distributed work, decision-making, and collaboration Globalization opportunities – Internet has drastically reduced costs of operating on global scale – Presents both challenges and opportunities The Role of Information Systems in Business Today © Prentice Hall 2011

25. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY In the emerging, fully digital firm – Significant business relationships are digitally enabled and mediated – Core business processes are accomplished through digital networks – Key corporate assets are managed digitally Digital firms offer greater flexibility in organization and management – Time shifting, space shifting The Role of Information Systems in Business Today © Prentice Hall 201125

26. Management Information Systems Read the Interactive Session and discuss the following questions CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY What are the advantages of using mobile handheld devices? What are the disadvantages? What features are needed in a mobile to make it a business solution? What business functions can be performed by using handhelds alone? How have other companies utilized handhelds? The Role of Information Systems in Business Today MIS IN YOUR POCKET © Prentice Hall 201126

27. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Growing interdependence between ability to use information technology and ability to implement corporate strategies and achieve corporate goals Business firms invest heavily in information systems to achieve six strategic business objectives: 1.Operational excellence 2.New products, services, and business models 3.Customer and supplier intimacy 4.Improved decision making 5.Competitive advantage 6.Survival The Role of Information Systems in Business Today © Prentice Hall 201127

28. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Operational excellence: – Improvement of efficiency to attain higher profitability – Information systems, technology an important tool in achieving greater efficiency and productivity – Walmart’s RetailLink system links suppliers to stores for superior replenishment system The Role of Information Systems in Business Today © Prentice Hall 201128

29. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY New products, services, and business models: – Business model: describes how company produces, delivers, and sells product or service to create wealth – Information systems and technology a major enabling tool for new products, services, business models Examples: Apple’s iPod, iTunes, iPhone, iPad, Google’s Android OS. The Role of Information Systems in Business Today © Prentice Hall 201129

30. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Customer and supplier intimacy: – Serving customers well leads to customers returning, which raises revenues and profits Example: High-end hotels that use computers to track customer preferences and use to monitor and customize environment – Intimacy with suppliers allows them to provide vital inputs, which lowers costs Example: J.C.Penney’s information system which links sales records to contract manufacturer The Role of Information Systems in Business Today © Prentice Hall 201130

31. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Improved decision making – Without accurate information: Managers must use forecasts, best guesses, luck Leads to: – Overproduction, underproduction of goods and services – Misallocation of resources – Poor response times Poor outcomes raise costs, lose customers – Example: Verizon’s Web-based digital dashboard to provide managers with real-time data on customer complaints, network performance, line outages, etc. The Role of Information Systems in Business Today © Prentice Hall 201131

32. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Operational excellence: – Improvement of efficiency to attain higher profitability New products, services, and business models: – Enabled by technology Customer and supplier intimacy: – Serving customers raises revenues and profits – Better communication with suppliers lowers costs Improved decision making – More accurate data leads to better decisions The Role of Information Systems in Business Today © Prentice Hall 201132

33. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Competitive advantage – Delivering better performance – Charging less for superior products – Responding to customers and suppliers in real time – Examples: Apple, Walmart, UPS The Role of Information Systems in Business Today © Prentice Hall 201133

34. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Survival – Information technologies as necessity of business – May be: Industry-level changes, e.g. Citibank’s introduction of ATMs Governmental regulations requiring record- keeping – Examples: Toxic Substances Control Act, Sarbanes- Oxley Act The Role of Information Systems in Business Today © Prentice Hall 201134

35. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Information system: – Set of interrelated components – Collect, process, store, and distribute information – Support decision making, coordination, and control Perspectives on Information Systems © Prentice Hall 201135

36. Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today An information system contains information about an organization and its surrounding environment. Three basic activities—input, processing, and output—produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems. Functions of an Information System

37. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Perspectives on Information Systems Information Systems Are More Than Computers Using information systems effectively requires an understanding of the organization, management, and information technology shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment. © Prentice Hall 201137

38. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Organizational dimension of information systems – Hierarchy of authority, responsibility Senior management Middle management Operational management Knowledge workers Data workers Production or service workers Perspectives on Information Systems © Prentice Hall 201138

39. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Organizational dimension of information systems (cont.) – Separation of business functions Sales and marketing Human resources Finance and accounting Manufacturing and production – Unique business processes – Unique business culture – Organizational politics Perspectives on Information Systems © Prentice Hall 201139

40. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Management dimension of information systems – Managers set organizational strategy for responding to business challenges – In addition, managers must act creatively: Creation of new products and services Occasionally re-creating the organization Perspectives on Information Systems © Prentice Hall 201140

41. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Technology dimension of information systems – Computer hardware and software – Data management technology – Networking and telecommunications technology Networks, the Internet, intranets and extranets, World Wide Web – IT infrastructure: provides platform that system is built on Perspectives on Information Systems © Prentice Hall 201141

42. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Investing in information technology does not guarantee good returns Considerable variation in the returns firms receive from systems investments Factors: – Adopting the right business model – Investing in complementary assets (organizational and management capital) Perspectives on Information Systems © Prentice Hall 201142

43. Management Information Systems CHAPTER 1: INFORMATION IN BUSINESS SYSTEMS TODAY Complementary assets: – Assets required to derive value from a primary investment – Firms supporting technology investments with investment in complementary assets receive superior returns – E.g.: invest in technology and the people to make it work properly Perspectives on Information Systems © Prentice Hall 201143

44. The main aim of the science of MIS is to “leverage human being capabilities”, on the other hand, some see that depending a lot on IS will result in replacing human beings inside the organization with systems that don’t mistake and don’t get tired!! Which of the views do you support? Explain your answer?! How important are employees in relation to IS?! Individual homework